Union Finance Minister Nirmala Sitharaman released the interim budget of the Modi 2.0 administration on 1st February 2024. The ruling Bharatiya Janata Party (BJP) of Prime Minister Narendra Modi is reportedly utilizing the interim budget for 2024–2025 as their economic platform ahead of the 2024 Lok Sabha election.
An essential component of India’s economic growth toward a $5 trillion GDP is the MSME sector. In her speech presenting the interim budget 2024 to the Parliament, Finance Minister Nirmala Sitharaman emphasized the significance of having sufficient funding.
Sitharaman said that the government wants to ensure timely and adequate finances, relevant technologies, and appropriate training for the micro, small, and medium enterprises (MSME)
Key Highlights for MSMEs in Budget 2024
Nirmala Sitharaman focused on the Micro, Small, and Medium Enterprises (MSME) sector, which makes up about 30% of India’s GDP, in her interim MSME Budget 2024 statement.
She emphasized the government’s focus on MSMEs under the banner of ‘Viksit Bharat’ by 2047 while expressing her displeasure with the interim Union Budget 2024 at the new Parliament building. This includes plans to boost trade and the economy, self-sufficiency strategies, and training for MSMEs.
The government would supply timely and essential funding, appropriate technologies, and appropriate training.
The economic survey claims that the government’s reforms for the MSME sector—which employs more than 11 crore people—have aided smaller companies in growing even further and recovering from the pandemic’s effects.
Emergency Credit Line Guarantee Scheme
The Emergency Credit Line Guarantee Scheme (ECLGS), the addition of retail and wholesale trades as MSMEs, the updating of MSMEs’ definitions under Aatmanirbhar Bharat, the implementation of TReDS to address MSMEs’ late payments, and the extension of non-tax benefits for three years in the event of an upward change in MSME status are a few of these.
On-time Payments: Budget 2024 highlights
Including this survey, went on to say that by allowing a tax deduction for expenditures incurred on payments made to MSMEs only when the payment is received, the Union Budget for FY24 made it simpler for them to receive payments on time.
Information on MSMEs has been aggregated owing to the Udyam portal and the Udyam Assist Platform (UAP), with 2.24 crore MSMEs registered on the Udyam portal and about 1.2 crore units registered on the UAP.
The government has established the Emergency Finance-Linked Guarantee Scheme (ECLGS) to give large sums of finance to MSMEs. According to Sunil Desai, managing director of Richfield Engineering India Private Ltd and an analyst on MSME panels at various events, there are more pressing issues for MSMEs that must be addressed, but the government is not prioritizing them. There are many Govt schemes for MSMEs
MSMEs are penalized for late payments as soon as they miss a loan installment.
The issue is whether you want to close the MSME or enter the market and have the industry help them grow. He goes on to say that the budget and industry rule designers are unrelated to the growth of MSME’s.
According to Nilaya Varma, co-founder of Primus Partners, acknowledging the importance of MSME, competing globally in the green economy, and having a policy environment that takes MSME needs into account are all critical.
Varma said that without making its MSMEs competitive, India cannot compete globally and create the jobs it needs.
Takeaways For MSMEs From Interim Budget 2024
Sitharaman presented her sixth consecutive budget, focusing on achieving ‘One Nation, One Market, and One Tax’ and the simplified business environment enabled by the Goods and Services Tax (GST). The interim budget 2024 allocated Rs 22,137.95 crores for MSMEs, including new clusters and technology hubs, for global competitiveness. Checkout how you can do GST registration.
The budget 2024 is critical for MSMEs that produce components. The government can help these businesses function as catalysts for technological advancement, job creation, and economic growth by implementing targeted measures and addressing their primary concerns.
Helping India’s MSMEs is not only economically necessary but also a calculated investment in the country’s future as it strives to establish itself as a global manufacturing hub.